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2017 (5) TMI 921 - ITAT AMRITSAR

2017 (5) TMI 921 - ITAT AMRITSAR - TMI - Setting off of indirect income against the operational income / trading loss - claiming deduction u.s 80IB - Held that:- CIT (A) has discussed this issue in his order wherein he has held that if other income of ₹ 3,55,40,053/- is not considered as derived from industrial undertaking, the industrial undertaking would incur a loss of ₹ 3,04,71,195/- and such loss has to be adjusted against the other income which was in the nature of interest inc .....

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712 - SUPREME COURT OF INDIA] - Penalty u/s 271(1)(c) - Held that:- CIT(A) has correctly deleted the penalty relying on the decision of Delhi High Court in the case of Nalwa Sons Investment Ltd.[2010 (8) TMI 40 - DELHI HIGH COURT] and furthermore on CBDT circular no. 25/2015 of 2014 wherein the Department has issued directions to the authorities directing them not to file appeal where the income tax payable on the total income as computed under the normal provision of the Act is less than t .....

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ar 2010-11. The grounds of appeal taken by Revenue are reproduced below: In ITA No. 515/(Asr)/2014 2.1 The worthy assessing officer has erred in bringing to tax certain incomes like interest on FDR/Margin money, insurance claim, other income etc. totaling ₹ 3,55,40,053/00 after having exempted them as profits of the company u/s 80IB of the Income Tax Act, 1961. The rationale behind the decision of the Hon'ble Supreme Court of India in M/s Sterling Foods v/s CIT is not applicable to the .....

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xcise duty refund was not surrounded by the uncertainty as to its collection, the same is allowed to be netted against the excise duty paid under the relevant accounting standard issued by the ICAI, in which case the profits (Exempted) will shoot upto ₹ 2,17,91,876/74 with no tax liability of the assessee. In ITA No. 286/(Asr)/2016 1. On the facts and circumstances whether the Ld. CIT(A) was right in deleting the penalty which was imposed on account of furnishing of inaccurate particular o .....

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14 1. On the facts and circumstances, the Ld. CIT(A0 was very much right in granting a relief of ₹ 3,04,71,195/00, since the amount represented trading loss of the assessing company and had to be adjusted against the indirect income of interest etc. amounting to ₹ 3,55,40,053/00 not eligible for exemption u/s 80IB of the Income Tax Act, 1961. 2. On the facts and circumstances, the Ld. CIT(A) has erred in bringing the excise duty refund of ₹ 1,67,23,019/00 to tax on accrual basi .....

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n account of taxes, duties, cess and the like are to be allowed as deduction on cash basis under section 43B of the Income Tax Act, 1961 even if the assessee followed mercantile system of accounting and therefore, the income on account of any tax, duty or cess must also be accounted for as income on cash (realization) basis . C.O. No. 13/(Asr)/2016, Arising Out of ITA No. 286/(Asr)/2016 1. On the facts and circumstances, the Ld. CIT(A) was very much right in upholding that where the Minimum Alte .....

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efore, for the sake of convenience a common and consolidated order is being passed. 4. At the outset, the Ld. AR invited our attention to the fact that there was a delay in filing of cross objections in CO No. 04/(Asr)/2015 and also invited our attention to application for condonation of delay and it was submitted that the cross objections could not be filed within time due to floods in Srinagar and it was prayed that the delay in filing of cross objections may be condoned. The Ld. DR had no obj .....

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5. As regards of appeal in ITA No. 286/(Asr)/2016, the Ld. DR submitted that Ld. CIT(A) has wrongly allowed relief to the assessee on account of deletion of penalty u/s 271(1) (c) of the Act, which the Assessing Officer had imposed correctly. 6. The Ld. AR, on the other hand submitted that the Ld. CIT(A) has correctly adjusted the indirect income against the operational income as in any case any total income has to be assessed after clubbing all the heads of income. Without prejudice it was sub .....

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of business and, therefore, the income from margin money was also relatable and derived from business. As regards insurance claim, the Ld. AR submitted that the assessee had received various insurance claims arising from various losses incurred during the operations like breakdowns, accidents, damages or other loss and which represented income from operations. As regards other income, the Ld. AR submitted that this represented amounts received from sale of scrap, sale of tender documents etc. a .....

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out prejudice the Ld. AR submitted that issue of subsidy on excise duty has now been settled by Hon'ble Supreme Court in the case of M/s Balaji Alloys Ltd. and therefore, the assessee may be allowed relief on this account itself. 7. As regards deletion of penalty, the Ld. AR submitted that as the minimum alternate tax paid by the assessee exceeded regular tax and therefore tax intended to be avoided was nil and therefore, the penalty was not imposable. 8. We have heard the rival parties and .....

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the other income which was in the nature of interest income, insurance claim etc. We find that this finding of Ld. CIT(A) is correct and is in accordance with the law as section 71 of the Income Tax Act allows set off of loss from one head against income from another head. For the sake of convenience the provisions of section 71 are reproduced. 71. (1) Where in respect of any assessment year the net result of the computation under any head of income, other than Capital gains , is a loss and the .....

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has not allowed claim of assessee u/s 80IB of the Act as is apparent from his findings noted at page 4 of this order and therefore these grounds of appeal are dismissed. 10. In nutshell, the appeal filed by the Revenue is dismissed. 11. As regards the grounds of cross objections, we find that first ground of cross objection is only supporting of Ld. CIT(A) s order and second ground has been withdrawn and therefore these two grounds are dismissed. The assessee has also taken a legal ground of ap .....

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d is a capital receipt. The findings of the Hon ble Jammu & Kashmir High Court in the case of Balaji Alloys Ltd. are reproduced below: Held, allowing the appeals, that the fact that incentives would become available to industrial units entitled thereto, from the date of commencement of commercial production, and that these were not required for creation of new assets could not be viewed in isolation to treat the incentives as production incentives. Such incentives designed to achieve a publi .....

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ew of the above the additional ground of appeal is allowed. 12. In nutshell, the cross objections filed by assessee are partly allowed. 13. Now coming to the penalty appeal, we find that Ld. CIT(A) has deleted the penalty relying on the decision of Delhi High Court in the case of Nalwa Sons Investment Ltd. ITA No. 1420, and furthermore, Ld. CIT(A) has relied on CBDT circular no. 25/2015 of 2014 wherein the Department has issued directions to the authorities directing them not to file appeal wher .....

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ions is less than the tax payable under deeming provisions of 115JB or 115JC, then penalty u/s 271(1) © of the Income Tax Act, 1961 is not attracted with reference to the additions or disallowances made under normal provisions. In the light of the above referred Circular of the Board, the penalty order made by the worthy Assessing Officer has been reduced to a nullity and accordingly is liable to be quashed. Determination: I have considered the facts of the case, penalty order u/s 271(1) ( .....

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CBDT vide its Circular No. 25/2015 dated 31.12.2015 has further clarified the position. The Circular reads as under: The CBDT has issued Circular No. 25/2015 dated 31.12.2015 pointing out that pursuant to the judgment of the Delhi High in Nalwa Sons Investment Ltd. 327 ITR 543 (Delhi) and the substitution of Explanation 4 of section 271 of the Act with prospective effect, it is now a settled position that prior to 1/4/2016, where the income tax payable on the total income as computed under the .....

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